Partners Group, the global private markets investment manager, has acquired a Grade A office property 25 kilometers west of central Tokyo, Japan, in Tama New Town, on behalf of its clients. The property has a net leasable area of 24,000 square meters and is currently 100% occupied. The investment is Partners Group’s first direct real estate acquisition in Japan for five years.
The eight-story Tama Center, built in 2002 and designed by renowned architect Kengo Kuma, is stabilized and cash generating, and is currently occupied by blue-chip Japanese companies. The asset is located near main transportation links to central Tokyo via road and rail, with the city’s central business district (CBD) accessible within 50 minutes. The investment will benefit from the limited supply of new office space coming to market in the area for the next five years, and a minimum weighted average unexpired lease term of three years, providing downside protection in the short term against the potential impact of COVID-19.
Partners Group will work with its local operating partner, Cypress Investment Management Co. Ltd., to execute a transformative business plan for the asset which includes increasing the net leasable area of the property by taking advantage of the building’s underutilized floor area ratio. Other value creation initiatives involve renovating the property, executing the lease renewals of key tenants and reducing energy consumption.
Rahul Ghai, Managing Director, Private Real Estate Asia, Partners Group, states: “The Tama Center is in an attractive location with good public transport and has high-quality tenants operating in defensive sectors. The asset’s Grade A office specifications and affordability compared to office space in central Tokyo, where rents are up to three times higher, should keep attracting corporate tenants. We will continue to look for transformational investing opportunities as the Japanese market offers strong relative value across the office, logistics and residential sectors.”
Euan Kennedy, Member of Management, Private Real Estate Asia, Partners Group, adds: “The Tama Center has defensive cash-flows with minimum near-term leasing risk. We have also identified positive demographic trends in the wider Tama area as Greater Tokyo continues to experience population growth and low unemployment rates, underpinning demand for office space. Looking ahead, we think this asset is well-positioned to benefit from structural tailwinds as demand for more satellite offices in non-CBD areas rise globally due to the impact of COVID-19.”